Question

Knapp Development's trial balance shows $155,000 face value of bonds with a discount balance of $2,800. The bonds mature in 10 years. How will the bonds be presented on the balance​ sheet?

Answer 1

D. Bonds payable $153,200 (net of $1,800 discount) will be listed as a long-term liability."

Step-by-step explanation:

Options are A. Bonds payable $155,000 will be listed as a long-term liability. A $1,800 discount on bonds payable will be listed as a current liability. B. Bonds payable $155,000 will be listed as a long-term liability. A $1,800 discount on bonds payable will be listed as a contra current liability. C. Bonds payable $155,000 will be listed as a long-term liability. D. Bonds payable $153,200 (net of $1,800 discount) will be listed as a long-term liability."

Bonds payable are maturing in 10 years and hence are long term liabilities and would be shown at net values i.e. current value less of discount (155000-1800)=$153,200. Hence correct option is D.